Flood repairs spark fear of labour shortage, rising costs

Reid Southwick, Calgary Herald08.02.2013

Filip Janovic of Trademark Renovations puts up drywall in the basement of a home in Elbow Park this week. The home was flooded by sewer back-up in the June flooding and because the home had air conditioning and inslab floor heating it dried out quickly enough to allow rebuilding to start.Gavin Young Gavin Young
/ Calgary Herald

Filip Janovic of Trademark Renovations puts up drywall in the basement of a home in Elbow Park this week. The home was flooded by sewer back-up in the June flooding and because the home had air conditioning and inslab floor heating it dried out quickly enough to allow rebuilding to start.Gavin Young Gavin Young
/ Calgary Herald

CALGARY — Calgary contractors are planning for a surge in renovations of flood-ravaged homes this fall while dealing with rising costs and a tight labour market.

“There’s not enough legitimate companies out there to deal with the amount of work that is coming,” said Bruce Hopkins, owner of the Remodelers and host of a local home-improvement television show. “You’ve got to be very, very careful on who you’re hiring.”

Crews have started renovation work in some Calgary and High River homes. But contractors expect momentum will build in the coming weeks as homes dry out and owners receive clarity on insurance coverage.

Hopkins said renovations of flood-damaged homes account for about 15 per cent of his firm’s work, but that number could rise to as much as 50 per cent as more property owners look to remodel after the cleanup.

“People are still trying to deal with the immediate crisis, which is, lets get our homes safe,” he said. “And I think the smart people are saying, at least we can live at home; maybe we don’t have a basement right now, but we will.”

Mainstreet Equity Corp., a Calgary-based real estate company that redevelops and manages apartment buildings, said last week in its third-quarter earnings report that an even tighter labour market in the aftermath of the flood will increase costs and spark delays in its renovation plans.

The firm, which owns about 8,400 apartment units in five western Canadian cities, including 1,600 in Calgary, will spend roughly $20 million this year upgrading and redeveloping its properties, said president and CEO Bob Dhillon.

Dhillon said Friday that Mainstreet is overhauling a 52-unit apartment building in northwest Calgary that was supposed to be finished by late June or early July. But he said the completion date has been pushed back by at least two months due to the flood and labour shortage.

The short supply of construction workers may also affect Mainstreet’s potential acquisition of an Alberta property.

“We are going through a due diligence period (for a building) that requires a considerable amount of renovation. And the only thing that I’m concerned about doing this project is the lack of labour,” said Dhillon, who declined to offer details because he hasn’t released them to shareholders.

“We may not have the labour to reposition this, so I may not complete this transaction. That’s the kind of thought process, which we never had before.”

Hopkins said there weren’t enough qualified trades workers in the city to handle renovation work even before the flood hit. Now, he said, workers from Vancouver to Cape Breton, N.S., are coming to Calgary. Some have contacted his company, but he turns them down to guarantee quality in his work.

Service Alberta assembled a special team of investigators to address public concerns with so-called “fly-by-night operators” and scam artists who may take advantage of property owners hit by the flood.

The team has visited affected regions to warn homeowners and tell them about fair contractor prices. A handful of investigations into complaints are underway, while the team is assessing other reports to see if there were any potential violations, according to Service Alberta.

Trademark Renovations is not hiring more crews to handle what it also expects to be a big rise in restoration work for the same reasons Hopkins cited.

“We don’t really want to get into storm chasing or hiring any guys that are storm chasers,” said owner Blair Foisy.

Foisy said there are fears that homeowners may turn to out-of-town contractors if they cannot find local companies to carry out the work. But he was fairly confident that local tradespeople and suppliers would not spike prices to profit from the flood-recovery surge.

“My only caution would be that anybody that is a storm chaser from out of town, that’s usually where the price gouging happens,” he said.

Foisy said he’s more customers are calling his office with work now that the provincial government has provided more clarity on its financial assistance package.

Trademark has booked nine restoration projects and four new homes that were heavily damaged by floods. Foisy said his company usually only takes on jobs worth at least $100,000 to get economies of scale, which means it has turned down more than 100 potential customers with smaller projects.

The province will compensate every eligible home affected by the June flood, covering basic finishes, such as vinyl siding, laminate countertops and vinyl flooring. Homeowners will have to dip into their own bank accounts for premium features, including hardwood flooring and granite countertops.

The government program states that homes on the so-called flood fringe, areas deemed less risky than floodways, can receive compensation for future damages if they take steps to mitigate the risk. The measures range from sealing basements to raising wiring and electrical outlets.

Commercial property owners have started some restoration work, including at the Calgary Zoo, Scotiabank Saddledome and exhibition grounds, but a similar surge is not expected for non-residential renovations, according to an industry association.

Other work will start once owners decide the fate of their properties, which could involve redesigns, but the construction industry can manage these commercial projects, said Scott Matheson, senior vice-chair of the Alberta Construction Association.

There have not been any price spikes or supply shortages with any materials so far, though companies have had to bring in cement powder from Edmonton because regular shipments from Exshaw are hampered by railway delivery challenges, Matheson said.

Renovation work has also boosted demand for drywall, but there is sufficient supply across Canada and the United States for the work, he said.

And, so far, Matheson said there are no reports that building trades for commercial projects are “desperately out of people,” though they are busy.

“The industry can manage this right now.”

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